Category Archives: Infrastructure

Infrastructure Privatization

Source: Journal of the American Planning Association, Volume 78, Issue 3, 2012
(subscription required)

Special Section on Infrastructure Privatization (Coordinated by Mildred E. Warner, Cornell University)

Articles include:
Value for Money and Risk in Public–Private Partnerships: Evaluating the Evidence
Matti Siemiatycki & Naeem Farooqi

When to Partner for Public Infrastructure? Transaction Cost Evaluation of Design-Build Delivery
Jan Whittington

The Financial Engineering of Infrastructure Privatization: What Are Public Assets Worth to Private Investors?
Philip Ashton, Marc Doussard & Rachel Weber

Insourcing and Outsourcing – The Dynamics of Privatization Among U.S. Municipalities 2002–2007
Mildred E. Warner & Amir Hefetz

Land Use Planning for Privatized Airports – The Australia Experience
Douglas Baker & Robert Freestone

Bill Would Allow Public-Private Partnerships For Big Construction Projects in Kentucky

Source: Kenny Colston, WKU Public Radio February 23, 2013

State Rep. Sannie Overly has filed a bill that will allow the Kentucky Transportation Cabinet to explore public-private partnerships to help construction projects with big price tags.

The bill doesn’t specifically name any projects, but Kentucky currently has multiple instances where the bill could help work start, namely the Brent Spence Bridge in Northern Kentucky and Interstate 69 in western Kentucky.

Take the Public-Private Road to Efficiency / American highways and bridges need repair. So does the way government approaches the job.

Source: Chris Edwards, editor of the Cato Institute’s website DownsizingGovernment.org. Wall Street Journal, February 19, 2013
(subscription required)

…. The 20th-century takeover of private infrastructure by governments (in the U.S. and abroad) pushed up costs and reduced innovation. Fortunately, some governments have started to reverse course. Hundreds of billions of dollars of railways, highways, seaports, airports and other assets have been partly or fully privatized in Europe, Latin America and elsewhere, but America lags behind. .. With public-private partnerships and full privatization, investment is less likely to flow to uneconomical projects that are chosen for political or ideological reasons. Private infrastructure is also more likely than government projects to be completed on-time and on-budget.

Accelerating Infrastructure Improvements with Better Public Policies that Tap Private Investment

Source: Donna Cooper, Keith Miller, and John Craig, Center for American Progress, November 27, 2012

From the introduction:
Despite the clear indispensability of assets such as highways, railroads, and drinking-water systems, policymakers in the United States have underinvested in core infrastructure for decades…. Of course, methods of stimulating more private investment will not obviate the need for additional public spending. It is clear, for example, that only specific kinds of projects are suited for private investment. These are primarily those that involve the construction of new facilities that will be heavily used and for which designated and predictable revenue streams can be identified. These sorts of projects are also generally most amenable to tolling or fee collection such as highway and bridge improvements or where appropriate leasing revenues can be generated, including at ports and airports. Nevertheless, additional private investment in viable financeable projects can free up significant resources for critical public undertakings…..

Leasing Sovereignty: On State Infrastructure Contracts

Source: Matthew Titolo, WVU Law Research Paper No. 2012-09, August 24, 2012

From the abstract:
Infrastructure privatization is in the news. Pennsylvania, California, Colorado and Indiana, among many other states and municipalities, have in the past ten years privatized — or attempted to privatize — toll roads, parking meters and other public infrastructure. State and federal policy has encouraged these public-private partnerships and infrastructure privatization. We’ve been here before. Private development of public infrastructure was common in states and municipalities in the nineteenth century. This was typically done through granting corporate charters and franchises. Widespread disillusionment with this model led to a public finance counterrevolution in the twentieth century. Privatization re-emerged in the 1980s and 1990s. Headlines such as “Why Does Abu Dhabi Own All of Chicago’s Parking Meters?” and “Cities for Sale” attest to the continuing controversy surrounding these arrangements.

This paper focuses on one of the more troubling features of infrastructure contracts: non-compete clauses. The relevant legal principles include the Contracts Clause, the reserved powers doctrine, legal prohibitions on alienating sovereignty and the inherent police powers of the state. I conclude that the non-compete terms run afoul of deeply-rooted common law and constitutional principles. If I am right in this, it follows that infrastructure contracts ought to preclude terms that permit the alienation of sovereignty. To be sure, what counts as an “alienation of sovereignty” will not always be obvious. Governments as a general rule must fulfill their contract obligations. But this general, abstract rule is subject to a limiting principle. On the one hand, the government acts as sovereign trustee of the public interest. In this capacity, government is a public actor with a certain degree of trumping power over private interests. On the other hand, when the government enters the market arena it is cast as an equal counterparty in a commercial contract. In this capacity, government resembles and is expected to behave as a reciprocally bound private actor. But this resemblance is often illusory. Unless our ancient anchor terms are hopelessly circular the essence of government remains public and not private. Because the government is not just a private party, advancing the broader public interest — however difficult to define — is not precisely symmetrical with advancing aggregate private interests. In other words, “efficiency” notwithstanding, the government cannot auction off its power to govern. Longstanding legal norms limit the scope, duration and subject matter of public-private contracts. States contemplating public-private infrastructure deals should think twice before selling the public birthright for a mess of pottage.

Spanish Construction Rivals Battle on New York Turf

Source: Landon Thomas Jr., New York Times, August 14, 2012

.. How a Spanish construction company immersed itself in the world of big-ticket New York City public works projects — where federal sting operations and payroll padding scandals can be as common as the heavy machinery used to bore tunnels under Manhattan’s sidewalks — carries the whiff of an episode of “The Sopranos.” But the consequences are far from fictitious. While ACS’s 28 billion euros, or $34.4 billion, in sales and a diversified portfolio of global businesses make for a substantial buffer, problems in one of its crucial markets — the United States, and New York in particular — may ignite concerns about the capacity of the company’s international operations to keep compensating for persistent problems in its home market.

Privatization Leading to a Shortage of Helium

Source: Mike Corbin, wibc.com, August 18, 2012

A shortage in helium is going to ruin some celebrations…not just parties either, but some age old traditions. Nebraska’s 70-year tradition of releasing red balloons into the air after the first touchdown of every game has been put on hold and the reason, according to Purdue chemist Greg Michalski, boils down to privatization. Michalski says a government storage facility that was started in the 1920’s when blimps were strategically important, was closed down, but uses for helium continued. In the 1990’s the helium storage facility became a budget cut, and the helium sold off, driving prices down, and causing helium producers to end production because it wasn’t worth the expense.

How local and regional governments are creating jobs

Source: Nancy Jackson, American City and County, July 23, 2012

…Working with private interests

Because many local government budgets have been strapped in recent years, funding for corporate incentives and other job attraction tools has been scarce. To overcome that challenge, a number of local governments have turned to public-private partnerships to fund projects and create jobs….

More mega projects turning to private investors

Source: Jason Keyser, Associated Press, July 7, 2012

For cities and states buried under mountains of debt, it has become a tantalizing proposition: invite private financial institutions to put up the money to fix aging schools, dilapidated rail lines and beat-up roads. Offer investors steady returns on the projects. And give the public the modern services its governments can no longer afford…. But as more cities consider packaging needs as prime business opportunities, questions are growing about how well the profit motive fits with the ideal of serving communities. Some officials worry about yielding control to private interests that can raise fees and decide which neighborhoods to serve based on profitability….